Closing Market Summary: Indices End Flat Ahead of Employment ReportThe stock market ended the Thursday affair on a flat note with the S&P 500 slipping 0.2% ahead of tomorrow's release of the March Employment Situation Report (consensus 200k). Other contributing factors for today's decline included weakness from the oil pit and the underperformance of the heavyweight financial sector (-0.2%). The benchmark index (-0.2%) ended its day in-line with the Dow Jones Industrial Average (-0.2%) and behind the Nasdaq Composite (UNCH).
The equity market began its day on a flat note as cautious trading overseas and indecision from the oil pit took center stage at the open. International bourses adopted a risk-off posture as they set their sights on tomorrow's influential Employment Situation Report for March. However, a rebound in crude oil and some early sector leadership from the heavily-weighted health care (-0.2%), technology (-0.2%), and financials (-0.2%) would lift the indices to their best levels of the day.
Nevertheless, the rebound in crude would not last as the energy component returned to its intraday low ($38.19/bbl) shortly before the conclusion of its pit session. As a result, WTI crude ended its day lower by 0.2% at $38.29/bbl while the broader market ended in the lower half of its trading range.
On the leaderboard, materials (-0.9%), industrials (-0.4%), consumer staples (-0.3%), and financials (-0.2%) trailed while utilities (+0.5%) and consumer discretionary (-0.1%) outperformed.
The commodity-sensitive materials space (-0.9%) ended its day on the bottom of the board after the release of the quarterly grain stockpile report from the USDA. The report showed that inventories of soybeans and wheat grew a respective 15.0% and 20.0% since last year. Agrochemical names such as Monsanto (MON 87.74, -3.35) and Mosaic (MOS 27.00, -1.12) ended their day with the steepest losses.
Life insurance names underperformed in the financial sector (-0.2%) as they pulled back from yesterday's rally that followed a favorable ruling for MetLife (MET 43.94, -0.79). On that note, the stock surrendered 1.8% after rallying 5.4% yesterday.
In the influential technology space (-0.2%), large cap names pulled back from their recent highs while the high-beta chipmakers underperformed. The PHLX Semiconductor ended its day lower by 0.6% as the sub-group fell in sympathy with Micron Technology (MU 10.47, -0.01). The chipmaker slid as much as 2.9% after guiding its third quarter earnings estimates below analysts' estimates. Conversely, tech heavyweight and Dow component IBM (IBM 151.45, +3.04) topped the price-weighted index.
Biotechnology outperformed throughout today's session as the iShares Nasdaq Biotechnology ETF (IBB 260.81, +5.87) extended its month to date gain to 1.6%. Conversely, weakness from drug manufactures Pfizer (PFE 29.64, -0.43) and Allergan (AGN 268.03, -6.91) weighed on the broader health care sector.
The U.S. Dollar Index (94.62, -0.22) ended off its low as the greenback regained some ground against the yen and the euro. The euro/dollar pair gained 0.4% and ended at 1.1383 after trading as high as 1.1411. Separately, the dollar gained 0.1% (112.56) against the yen.
The Treasury complex inched towards session highs throughout the afternoon with the yield on the 10-yr note ending its day lower by five basis point at 1.77%.
Today's participation was above the recent average as more than 974 million shares changed hands on the NYSE floor.
Today's data included weekly initial claims and the Chicago PMI for March:
- Initial claims for the week ending March 26 rose by 11,000 to 276,000 (consensus 265,000).
- Despite the headline increase, the series remains inside a 250,000-300,000 range that has been in effect since July 2014.
- Including today's release, initial claims have now been below the 300,000 mark for 56 consecutive weeks.
- There were no special factors influencing the report and the four-week moving average moved up by 3,000 to 263,250.
- Continuing claims for the week ending March 19 were 2.173 million, down 7,000 from the upwardly revised prior week level of 2.180 million (from 2.179 million).
- The four-week moving average for the series fell 14,500 to 2.191 million.
- The Chicago Purchasing Managers Index registered a 53.6 reading for March, which was above the consensus estimate of 49.9 and well above the prior month reading of 47.6.
- Today's reading lifted the index above 50, which is the demarcation line between contraction and expansion in activities.
- Over the past seven months (including February), the index registered four contractionary readings, making today's report a welcome sight; however, the series will need to continue expanding in coming months in order to make a run at last year's highs.
- The March improvement was driven by snapbacks in Production and Employment components of the report. The Production Index spiked to 53.7 from 44.0 while Employment surged to 52.8 from 45.2, reaching its highest level since April 2015.
- Furthermore, New Orders (to 55.6 from 51.7) and Order Backlogs (to 49.7 from 45.3) also improved, underpinning the headline increase. Despite the improvements, Backlogs remained below 50 to continue a stretch that dates back to January 2015.
Tomorrow's economic data will include the 8:30 ET release of the Employment Situation Report for March (consensus 200k). Separately, the ISM Index for March (consensus 50.6), Construction Spending for February (consensus 0.2%), and the final reading of Michigan Consumer Sentiment (consensus 90.5) will each cross the wires at 10:00 ET.
- Nasdaq Composite -2.8% YTD
- Russell 2000 -1.9% YTD
- S&P 500 +0.8% YTD
- Dow Jones +1.5% YTD